SEC: Less Personnel Than the Smithsonian
These are some truly amazing details:
"The number of enforcement personnel, the people who go after the financial engineers, is expected to decline. That's right. Despite the trillion-dollar meltdown now underway, the number of SEC enforcement personnel will decline from 1,209 this year to 1,177 in 2009. In all, the SEC expects to have 3,771 employees next year. For comparison, the Smithsonian Institution budget for 2009 includes funding for 4,324 employees.
That's not meant as a slap at the Smithsonian. It houses a myriad of the nation's most treasured objects. But the SEC actually guards the nation's treasure. And yet, Congress treats it like a bastard stepchild. Indeed, Congress doles out more than five times as much money for corn subsidies ($4.9 billion in 2006, the most recent year for which data are available) as it does for the SEC.
Those pitiful numbers lead us to the innumerable problems posed by derivatives, the same financial instruments that led to the chaos at Enron, which before it failed operated a huge—and almost completely unregulated—derivatives exchange business. According to the Bank for International Settlements, the global derivatives market is now worth some $676.5 trillion. That's $676,500,000,000,000. That's a fivefold increase over the value of derivatives that were traded in 2003. Further, that $676.5 trillion is 51 times America's current gross domestic product. (emphasis added)
Gee, how on earth did the 3 million people working in the finance industry ever mange to get away with anything with that type of police enforcement?
>
Source:
From Enron to the Financial Crisis (with Greenspan in Between)
Robert Bryce
US News, September 24, 2008
http://www.usnews.com/articles/opinion/2008/09/24/from-enron-to-the-financial-crisis-with-alan-greenspan-in-between.html
Saturday, September 27, 2008 | 04:30 PM | Permalink
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Comments
1) What happened to the Cramer thread? A lot of people took time to comment, then POOF.
2) Why is Arlen Specter, US Senator, sitting two rows behind the plate at the Phillies game when he should be in DC working on the bailout?
Posted by: Steve Barry | Sep 27, 2008 4:58:02 PM
@Steve Barry: Do you not know Arlen's history with Philly sports? He cares far more about sports than doing his job.......
It's pathetic. He should be voted out the next time he's up for re-election.
Posted by: Jeff M. | Sep 27, 2008 5:08:38 PM
Talking about the bail out legislation why not break the impasse approving both proposals?
And let the president to decide which one to veto. Is that possible?
Posted by: Economist | Sep 27, 2008 5:10:38 PM
Uh-oh, me thinks someone at theStreet.com didn't like Cramer's monumental lack talent on display for all to see. Understand people that Cramer is one of the most protected media personalities in history. A lot of people make money off of him. He is an industry. And the truth is the enemy of that industry. I don't think we'll be seeing the Cramer thread again.
Posted by: Eric | Sep 27, 2008 5:14:08 PM
Barry,
Please talk to your head in the sand buddy Mauldin. Mr. muddle through ant-FASB157 wrote this:
"What happens if we walk away? Within a few weeks at most, financial markets will freeze even more. We will see electronic runs on major banks, and the FDIC will have more problems than you can possibly imagine. The TED spread and LIBOR will get much worse. Businesses which use the short-term commercial paper markets will start having problems rolling over their paper, forcing them to make difficult cuts in spending and employment. Larger businesses will find it more difficult to get loans and credit. That will have effects on down the economic food chain. Jim Cramer estimated today that without a plan of some type, we could see the Dow drop to 8300. That is as good a guess as any. It could be worse. Home valuations and sales will drop even further."
My answer to this is: SO? The guy can't buy a new car. SO? The guy loses equity on his house. SO? Hey, Mauldin. The car has already been built. They'll find a way to sell it. The same for houses. Mauldin is Mr. Status Quo. What does Mr. Status Quo say about CDS's which won't be honored because his precious trading friends are bankrupt or on the wrong side? He says "the market" can't handle it and this needs patience. Yeah, Mauldin. The same patience you have with the homeless. Is it something in the water in Texas?
Posted by: AGG | Sep 27, 2008 5:19:02 PM
What's all the hub-bub about Cramerica calling 8000 on the Dow? It would be well within its 100 year uptrend, inflation adjusted, to fall to 3500. Have the balls to call that one.
www.geocities.com/WallStreet/Exchange/9807/Charts/SP500/Dji200_0710.gif
Posted by: Steve Barry | Sep 27, 2008 5:33:26 PM
Just reading the headlines today:
http://news.yahoo.com/s/nm/20080927/bs_nm/us_washingtonmutual_confidence_1
This just jumped out at me:
"In February its regulatory rating slipped to a 3 from a 2 on a scale that goes down to 5. That was not enough to place it on the Federal Deposit Insurance Corp's troubled bank list, but it was a portent of things to come."
What the fuck does that tell you about the FDIC's troubled bank list? Worthless? Geez.
Posted by: Big E | Sep 27, 2008 5:39:31 PM
The Smithsonian is too well loved, and its budgets are too unquestioned. It should have been capped years ago. I'd be fine with downsizing it now, or even triggering a breakup (falling taxpayer contributions should trigger collections traded to other institutions).
Posted by: odograph | Sep 27, 2008 5:41:44 PM
Steve,
no kidding, 8K, on the Dow, would look like a minor pull-back. that's the idea behind the joke of 200.5(k) accounts..
Jeff,
We, either, did, or try to, unseat Sen. 'Magic Bullet', in '04 when Toomey ran against him in the (R) primary. He 'lost' 51-49 with te usual 'voting irregularities'.
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Specter+Toomey+primary+results+voting+irregularities
Posted by: Mark E Hoffer | Sep 27, 2008 5:56:53 PM
Ok, can we finally dig up Milton Friedman, de-deify him, and then stick him back in the ground as a mortal? When Friedman said that Government Regulation is Corruption he got it almost exactly wrong. Human nature makes for irrational markets; greed, avarice, and heck yeah, sloth are among the things of mankind that render Friedman's neat models useless, and even dangerous.
I'll reiterate that a silver lining in all this is that it occurred while the administration that enabled it still sits in power. That is just (and more than a wee bit amusing...)
$676 trillion. That's lunacy.
Posted by: Scott in Chicago | Sep 27, 2008 6:04:31 PM
looks like Cramer had his Kramer moment.
Posted by: debreuil | Sep 27, 2008 6:09:38 PM
Scott,
I carry no brief for Friedman, though, you need to understand that, on this Coin, there is, most assuredly, Two Sides.
Simply, this inverted Pyramid could have Never been created w/o 'Gov't''s imprimatur lulling/prodding People to sleep/act..
http://www.thefreedictionary.com/imprimatur
Posted by: Mark E Hoffer | Sep 27, 2008 6:17:48 PM
@eric, very odd about the cramer thread.
@AGG, agree with you on Maudlin this time. The bloated financial empire was their livelihood and they don't want to see it die. The US economy was never fundamentally strong; it was a false economy kept aloft by a credit bubble.
@Mark E Hoffer, left you a post on the previous thread.
@debreuil, very clever!
Posted by: karen | Sep 27, 2008 6:26:13 PM
"Despite the trillion-dollar meltdown now underway, the number of SEC enforcement personnel will decline from 1,209 this year to 1,177 in 2009."
Shows how wrong our government's priorities are. But isn't that the real problem to begin with? Ask yourself, who benefits from fewer SEC enforcement personnel?
Posted by: Pat G. | Sep 27, 2008 6:34:32 PM
What makes the decline in SEC enforcement even more criminal is that the SEC makes money. Its fees on filings have for decades exceeded its budget, and the surplus goes back to the general fund. The SEC could have been a well-staffed agency if it was allowed to keep what it brings in.
Posted by: nadezhda | Sep 27, 2008 6:40:16 PM
Maybe they thought it was like OSHA - protecting those 3 Million workers in finance, instead of protecting our monetary exchange system...
Hell, what kind of hurt can a guy working in an office do to himself typing at a computer?
I'll go with the overweighting on influence that lobbying brings. It really isn't about the money--it is about friendships that develop between the lobbyists and the politicians while the lobbyists spend money on them (let's meet at Marty's Beef House to discuss that bill)...the politicians just get out of whack on their priorities; like everyone, they work harder for their friends than people they don't know.
Posted by: wnsrfr | Sep 27, 2008 6:51:21 PM
I just read this comment and thought I would share it:
"The Wall Streeters paid themselves in US dollars for trading worthless mortgages on the world market and for trading other worthless paper amongst themselves, They took those US dollars and purchased houses, boats, and stocks and bonds in legitimate businesses.
Track them down. Take back the houses, boats, the legitimate stocks and bonds, and cash. Use part of the proceeds to indict, convict and jail the Wall Streeters. Divide the remainder of the stocks, bonds and cash amongst legitimate holders of stocks, bonds and cash. Use a rational plan to distribute it the stocks and bonds to any and all of the parties who invested hard-earned, real money into retirement funds or other legitimate investment programs. Distribute the cash to health care or other legitimate social programs. Perfect? No." Snydfly
Pie in the Sky it may be but in a just world, this would be justice.
Posted by: AGG | Sep 27, 2008 7:12:56 PM
"like everyone, they work harder for their friends than people they don't know."
Their friends only had one vote apiece. It was the masses who elected them and of this they should NEVER lose sight.
Posted by: Pat G. | Sep 27, 2008 7:23:31 PM
ACG -
So when do the mobs get to opine on whether whatever you do with your days -- and thus your claim to your own property -- is "legitimate"?
Posted by: jac | Sep 27, 2008 7:24:43 PM
I agree with Kunstler that the GOP under Bush has wrecked America and if for bizarre reason more Americans vote against their own self interests for the 3rd time in a row then Americans had better get a new "Dream" and fast !
Posted by: km4 | Sep 27, 2008 7:32:22 PM
OK! Time to go long ! This is capitulation !
I've made tons of money during the last 4 years feeding with contrarian (anti-Cramer) algorithms my trading software.
Posted by: Graham | Sep 27, 2008 7:51:56 PM
Some people are reporting total derivatives as over a quadrillion based on the BIS. The claim being that the latest figures are 596T OTC and another 548T on listed exchanges but the later figure is not given in the latest report so the Dec figure has to be used. It appears to me that the latter figure table is there but without a total. Quickly adding it on my fingers it seems to be about 84T about 680 so your 676T is probably right.
Posted by: chris_gee | Sep 27, 2008 8:17:39 PM
After declaring he’d return to Washington to help with the bailout negotiations immediately after last night’s debate, Sen. John McCain never went to Capitol Hill today. In fact, McCain stayed largely holed up in his Arlington apartment, leaving only to go to his campaign headquarters just around the block, the New York Times reports.
Stick a fork in McCain/Palin because the Unstable/Unable combo are done !
Posted by: km4 | Sep 27, 2008 9:04:07 PM
km4,
Apparently, at the big meeting at the White House, the democrats with Obama as the chief protaganist, practically made McCain cry by forcing him to voice an opinion on the House Republicans daffy alternative insurance-based plan. McCain wouldn't say anything, just like he wouldn't look at Obama during the debate.
He left, first one out of the room, alone. He is a very unhappy man. Seems a little angry too.
Posted by: wnsrfr | Sep 27, 2008 9:45:55 PM
I don't get Donlan's column in Barron's at all. He says taxpayers aren't bailing out banks, but rather the banks' lenders. Huh? If the government sends cash to banks, and in return the banks send mortgage related securities that they can't sell anywhere else to the government --- securities that the banks currently own and will suffer losses on in the event of a default --- how are we not bailing out the banks themselves?
Posted by: Eric | Sep 27, 2008 10:07:15 PM
